More Stories

Informist, Wednesday, Jan. 8, 2025

 

NEW DELHI – The finance ministry has filed a review petition in the Supreme Court against its October order permitting the real estate industry to claim input tax credit on construction expenses for buildings meant to be leased. The government has sought the apex court to align with its original legislative intent after the 55th Goods and Services Tax Council meeting last month suggested a retrospective amendment to the Central Goods and Services Tax Act, 2017, to correct what it described as a "drafting error" in the legal provisions related to income tax credit. 

 

The retrospective amendment has aimed to reverse the apex court's ruling by changing the terminology from "plant or machinery" to "plant and machinery" in Section 17(5)(d) of the Central Goods and Services Tax Act, 2017. 

 

In October, the apex court had held that the expression "plant or machinery" used in Section 17(5)(d) cannot be given the same meaning as the expression "plant and machinery" defined by the explanation to Section 17. "If the construction of a building was essential for carrying out the activity of supplying services, such as renting or giving on lease or other transactions in respect of the building or a part thereof, which are covered by clauses (2) and (5) of Schedule II of the CGST Act, the building could be held to be a plant," the court had said.

 

The apex court was hearing a challenge to clauses (c) and (d) of sub-section (5) of Section 17 of the Central Goods and Services Tax Act, 2017, which it had rejected in its judgement. The case had its genesis from an Odisha High Court ruling that allowed Safari Retreats Pvt. Ltd. to claim the benefit of input tax credits on works contract and other goods and services used in the construction of an immovable property, excluding plant and machinery. The high court had said that input tax credit for construction materials under the provision cannot be denied to developers constructing properties for renting out.  End

 

Reported by Surya Tripathi

Edited by Deepshikha Bhardwaj

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.